Decongesting the supply chain with port time slot management
Disruption and congestion are occurring across global maritime supply chains. Since the summer of 2020 rising capacity shortages in terms of boxes, ships and port infrastructure have driven maritime and port actors to find alternative options and to optimise infrastructure usage.
Much of the contemporary debate on how to resolve the situation is centred around just-in-time vessel arrival at ports, but that only addresses part of the problem. The many operators and clients of maritime supply chains need to overcome these times of continuous shocks, disruptions and high uncertainty. This works best with a high level of visibility.
In this article, we propose the use of time slots and data sharing that will empower the different parties to make more informed and flexible plans to overcome the disruptions and congestion in the supply chain system and improve supply chain visibility. This contribution is a call for an expansion of the JIT arrival approach to incorporate a slot management concept that includes a dynamic view and management of JIT arrivals and departures to better manage uncertainties.
Port congestion, poor schedule integrity and container imbalances are making headlines. The recent Ever Given incident in the Suez Canal brought shipping and the delayed arrival of cargo into the news. But the problems go much further.
Many think that maritime supply chains are disjointed and that ports are insufficiently synchronised with ship journeys and multi-modal transport capacity in the hinterland. Record high freight rates reflect the current situation in the maritime sector. With the supply chain under pressure, the resulting imbalance between demand and supply has led to a surge in the prices to move containers.
The main concern for supply chains is to reach higher levels of certainty throughout the chain while also capturing possibilities to reduce costs and emissions. Shipping companies as well as the clients of maritime supply chains try to develop mitigating strategies to reduce vessel waiting times and uncertainty about when a vessel will be served by the port, such as by getting to the port area as quickly as possible or by overbooking facilities. This is wasteful, costly and inefficient.
The fundamental underlying cause for the current delays and high freight rates is a shortage of capacity, including ships, containers, trailers, and vehicles needed for the intermodal transport operation.
The logistics industry has two options to get back to normal. It could increase the pool of equipment to have spare capacity at its disposal so that when demand surges or supply is disrupted, the extra ships, containers, vehicles, and trailers can provide the additionally required supply. This is wasteful, costly and inherently inefficient. Alternatively, it could introduce methods that allow the existing capacity to handle a larger volume of cargo. In this paper, we focus on the latter option.
Predictability in arrival and departure times
The maritime sector is putting increasing focus on digitalisation to enhance coordination and synchronisation in the self-organised ecosystem of the maritime supply chain network. One promising initiative is the introduction of virtual vessel arrival and standardised data exchange for just-in-time (JIT) arrival promoted by numerous stakeholders associated with the maritime industry.
The proposed JIT arrival approach makes the case that a port provides a recommended time of arrival (as outlined in figure 1). This approach will also help, in part, to address what is needed for the reduction of greenhouse gas (GHG) emissions. However, JIT limits itself to a port to ship interface and could result in a one-sided port view, which may cause concern for shipping lines, particularly during times of port congestion.
One way of avoiding this would be the introduction of slot times that could be used in an elastic way, and under conditions that all the involved parties collectively govern. When implemented in a transparent fashion, this would also give beneficial cargo owners increased visibility and greater confidence, which would lead to less uncertainty, a reduced requirement for contingency buffering and less money wasted.
Accordingly, we propose an expansion of the JIT arrival approach to incorporate a slot management concept that includes a dynamic view and management of JIT arrivals and departures. This would be informed by shared data providing up-to-date progress and planning information on queues and waiting times associated with ports as maritime chokepoints. It would allow all participants to operate more effectively in the extensive maritime chain.
Other industries’ approaches
Using slot times as the denominator for the engaged parties underpins the appointment economy, allowing both the customer and the supplier to coordinate on a common basis and to inform the other party if experiencing challenges in meeting the agreed slot times. This logic can be seen in many of the human practices that require collaboration between multiple parties, for example for a doctor’s appointment, or repairing a car.
Although not directly transferrable, the analysis of practices in other industries may help to inspire our maritime time slot thinking and shape solutions to deal with disruption and congestion in the maritime industry. The following examples show how slot times work in different situations.
In the European aviation system, for most commercial flights, an airplane cannot depart from the airport of origin without having obtained a confirmed slot time at the airport of destination. The slot times, delimited by an arrival and a departure time, enable the actors operating at the destination airport to be well coordinated and synchronise their activities.
The A-CDM (Airport Collaborative Decision Making) concept plays an important role in this coordination. Because airports suffering from constrained infrastructure and congestion can limit the number of slots for flight arrivals, the aviation sector self-governs such situations before take-off and avoids unnecessary fuel and operating expenses and carbon emissions, as well as mid-air diversions or excessive waiting in holding patterns before landing.
The outcome of the A-CDM process would usually be to change to a different time slot, and in extreme cases would lead to a cancellation or choosing an alternative destination airport.
Express delivery companies increasingly consult receivers of goods about their preferred time of delivery to avoid unnecessary delivery attempts. Large manufacturing plants and retail outlets often specify a delivery time window in order to avoid congestion and ensure that the goods can be offloaded and stored efficiently. For home deliveries, delivery preferences go beyond only fixing the preferred delivery date and time but also can include a choice of alternative delivery points, like pick-up points or delivery to neighbours.
However, it must be acknowledged that all the examples above relate to relatively short journey times, unlike in the maritime sector where the time of arrival may be several weeks or even months after the departure.
The longest air transit will seldom exceed 48 hours, including intermediate stopovers; even an intercontinental road transit delivery can be measured in days rather than weeks. Meanwhile, a trans-global ship journey could last weeks and involve a number of intermediate port visits.
This means that, unlike an air transit or a local land-based delivery, there are many more opportunities for conditions to change en route (weather, breakdown, delays in intermediate ports, and so on) resulting in more unpredictable and sometime cumulative delays or disruptions after the journey has commenced.
This difference means that any time slot mechanism adopted for port calls must be much more dynamic and capable of adjustment for such ongoing changes, but this can be achieved through improved data sharing between all the involved actors and by adopting the principles of Port Collaborative Decision Making (PortCDM) or Port Call Optimization.
Adopting the concept of slot management can ease the current pressures on ports, carriers and shippers caused by congestion and the consequent unpredictability and increased expenditure. As is the case for other practices grounded in the appointment economy, the slot time is the unit of analysis, allowing us to move beyond coordination based on physical arrival and the principles of first-come, first-served.
A slot time provides each involved actor, on a fair and equal basis, with the opportunity to plan ahead, regularly monitor progress and coordinate their activities towards achieving the common goal of a satisfactory, predictable and timely delivery. At the same time supply chain visibility is improved, meaning fewer surprises and the need to make alternative plans at short or no notice.
We see opportunities to expand the model of JIT shipping to cover the range of typical scenarios (see figure 2 below), by delimiting arrival and departure slots. In this context, predictions of departure are important as these provide an understanding of when the infrastructure being used for one ship can be made available for another.
Scenario A is when the time of departure from the previous port enables just-in-time arrival to the next port allowing for optimal steaming speed to destination.
Scenario B is when there are delays in departure from the previous port, causing challenges for subsequent visits by other ships to that previous port. There are two options for the ship to synchronise with the destination port:
- B1 Increase the transit speed to the next port (less energy efficient, causing more GHG emissions) or,
- B2 Agree a new slot time with the port of destination and then steam at the speed originally planned or at an adjusted speed. This will most likely be of greater concern to the shipping companies than the ports, as they face constraints on their shipping infrastructure and may have provided arrival commitments to their customers.
Scenario C is when the infrastructure is constrained at the port of destination. The following alternatives then arise for the shipping company:
- C1 The ship stays alongside in the previous port as long as possible. This alternative, however, requires that the ship that stays alongside is charged lower charges for this extended port stay.
- C2 The ship anchors outside the port of destination. This alternative, however, assumes a minimal anchorage fee providing incentives for the ship to stay at anchor rather than loiter / drift outside the port area.
- C3 As the anchoring areas outside the port might be full, the ship may anchor somewhere on the way towards the destination. This, however, requires that anchoring areas are established at different locations along trade routes throughout the world to mitigate for congestion at ports of destination.
The need for data sharing
All of these scenarios build upon trust in the slot time at the port of destination, since this relates directly to the destination port’s capability to serve a ship and a ship’s ability to arrive and depart on time.
This can only be handled by ships and ports collectively and continuously by each providing the other with information on the predictions of meeting arrival and departure times and consequently taking mitigating actions when disruptions occur. This is the basis for both managing and rescheduling timeslots because of disruptions and also understanding when ports are reaching the limits of their handling capacity.
A well-functioning, dynamic and responsive slot management regime depends heavily on data sharing that enables all affected actors to share a common situational awareness. This is particularly important when plans and forecasts begin to change.
Just-in-time arrival addresses two sides of the same coin: the shipping company’s possibilities to arrive on time and the port’s capabilities to receive and serve the ship. Thus, it is not only about the port of destination requesting when a ship can/should arrive, but also the shipping company evaluating its options depending on the specific situation during a rotation and the commitments given to customers. Finding the optimal slot is likely to be an iterative process.
Slot times as a foundation for maritime supply chain visibility allow cargo shippers to receive up-to-date information about possible delays, and help shipping companies to make well-founded decisions on how to best serve their clients. The optimal speed and route to destination are decisions to be made by the shipping company and a ship’s captain based on the timing and possibilities that a port offers to serve the ship.
The coordination also requires an expansion in communication beyond just the ship and to incorporate fleet operating centres. Introducing more anchoring zones along routes would increase the number of options for shipping lines as well.
The maritime industry would benefit from managing uncertainties as they come with high costs for the entire supply chain network, something the current surge in ocean container freight rates demonstrates. Acknowledging both the predictability of arrival and departure times would help the industry to move from sequencing based on physical presence to virtual coordination, an important step into an increasingly managed future.
Editor’s note: This article is an abridged and edited version of the original paper by the authors, which includes further details and a full list of references. The full paper can be downloaded here.